The government has been accused of betraying Britain's 200-year history in the fight against slavery and of isolating itself on the world stage after refusing to back an international convention protecting domestic workers from exploitation.

On the same day that the work and pensions secretary, Iain Duncan Smith, launched an inquiry by the Centre for Social Justice into tackling the "modern slavery" of trafficking, the coalition revealed it would abstain from voting on the International Labour Organisation's convention covering domestic workers.

The Department for Business, Innovation & Skills said it would not be ratifying the convention to bind the UK by its rules "for the foreseeable future", so felt it would be wrong to vote for it at all.

The UK is thought to be the only member country of the ILO, a UN agency, set to abstain from the vote in Geneva on Thursday.

Campaigners were stunned by the move, saying it would embarrass Britain, leave domestic workers in the UK vulnerable, and undermine efforts to improve conditions in countries where employees had even less protection.

The convention is designed to help protect workers such as cleaners, cooks and nannies, hundreds of thousands of whom around the world are denied basic rights and mistreated, or even enslaved.

In the UK they are not covered by working-time regulations, or by health and safety legislation, and if they live with their employers and are treated as "family" are not entitled to the minimum wage. Many who should be covered by the wage limit are not because of a lack of regulation, charities say.

A survey by Justice for Domestic Workers, of 111 members in 2009, found more than half had to work more than 55 hours a week, and 95% did not get the minimum wage.

Aidan McQuade, director of Anti-Slavery International, said of the business department's decision: "This is just shocking. It's letting down other countries, it's letting down those most vulnerable to forced labour and abuse, and it's letting down the citizens and traditions of this country.

"Britain makes great and rightful claim to leading the struggle against slavery for 200 years. Here is a critical front and the UK is not only not pulling its weight but is actually trying to pull others back.

"I was at the Centre for Social Justice launch this morning. We're talking about being a leader in the struggle against slavery and here's Britain saying 'yeah, we're not that concerned'."

The CBI, which holds the ILO "employers' vote" for the UK, said it would vote against the convention. Its director for employment, Neil Carberry, said: "The proposed convention would undermine the principle of EU law that an individual should be protected against being forced to work long hours but can choose to work longer if they wish."

Christian Aid said it was "deeply concerned" by the government's actions. "By raising objections to this vital convention the UK government will weaken the international consensus, meaning fewer countries will ratify it, and domestic workers in countries where existing protections are weak are likely to remain vulnerable to exploitation," said Oliver Pearce, the charity's policy officer.

The business department said it did "strongly support" the principles enshrined in the convention. But a spokesman said: "The UK already provides comprehensive employment and social protections to domestic workers and we do not consider it appropriate or practical to extend criminal health and safety law, including inspections, to private households employing domestic workers."

McQuade pointed out that both coalition ministers covering the subject, Ed Davey and Vince Cable, were Liberal Democrats. "I imagine Liberal Democrat supporters may be appalled to know what they've done with power," he said.

Labour's former Europe minister, Denis MacShane, wrote to David Cameron asking him to reverse the decision. "I cannot believe that you or any member of the coalition government can oppose this measure. It is sad and shameful that Britain alone in the world will refuse to vote for this convention."